Quick Facts About Oil and Mining:

Promising oil deposits were found in the Gulf of Thailand, 140 kilometers from Sihanoukville.

The right to drill was awarded to US-based oil company Chevron.

World Bank and United Nations' Development Programme initially estimated that the reserves could yield 400-500 million barrels of oil and 2-3 trillion cubic feet of gas. As of mid-2008, UNDP confirms their estimate to be at least 700 million barrels of oil, while the World Bank has withdrawn its estimate.

Valuable deposits of bauxite, used to make aluminum, are now being mined  in the eastern provinces by international mining powerhouse BHP Billiton.

The situation:

Large deposits of oil have been discovered in the Gulf of Thailand, which, if managed properly, could mean good news for the Cambodian economy. The race for oil started in 2005 when U.S.-based Chevron confirmed oil deposits at offshore wells 140 kilometers southwest of the port of Sihanoukville. It will take several years for drilling to commence, but preparations for this major process are already underway.

The push for mining has now intensified with the support of BHP Billiton, the world’s largest mining company, which began digging for bauxite in eastern Cambodia. Bauxite, used to make aluminum, is a valuable raw resource for companies looking to invest in extracting it from Cambodian lands. Previously, the mining industry has been mostly unregulated and limited by the presence of potential landmines. BHP Billiton’s presence may accelerate the process of uncovering and defusing landmines in previously pristine wooded areas, further opening the door for other international companies to work in Cambodia.

The discovery of a resource as valuable as oil could flood the economy with billions of dollars of wealth. Ranked 133 of 177 countries globally in terms of GDP by the United Nations Development Program in 2005, Cambodia is still struggling to recover from decades of war and conflict, and still has many economic hurdles to overcome. Without the proper infrastructure to manage this wealth, though, this resource boom could makes things worse for the average Cambodian. Prime Minister Hun Sen has pledged that the money will be properly managed and invested into public works projects such as bridges, roads, and school construction. Cambodians and members of the international community do remain skeptical about  the use of oil income given the current level of corruption in Cambodia.

For a developing country to uncover oil, diamonds, or other forms of potential wealth, international experts worry about a “resource curse.” It is crucial to allow financial transparency in these industrial pursuits. The United Nations Development Program also speaks of the “Nigerian disease”: the country's government was not equipped to harness and manage the influx of wealth into the country from oil development and as a result, conditions of poverty only worsened.   

If Cambodia can establish itself as a resource-rich nation, it can mean big changes in the coming years.  Nearly 2/3 of the country’s annual revenue comes from foreign aid, plus $4 billion per year in foreign investment into tourism, agriculture, mining, textiles, and other industries. Money from offshore drilling, as well as mining, could begin to replace the need for donor aid.

What will all these developments mean for Cambodia’s residents? There could be great benefits or great drawbacks. We are particularly interested in the potentially negative environmental effects in the recovery of natural resources. 

Oil spillage from undersea drilling can greatly damage the fragile marine ecosystems. Cambodia has a coastline of approximately 435 kilometers, along with a number of islands in the Gulf of Thailand. The port city of Sihanoukville is a thriving tourist destination, particularly as a departure point for diving tours. The coastal waters host giant clams and mussels, stretches of coral reef, stingrays, and abundant tropical fish. In addition to the environmental impact of drilling, it can also harm the tourism industry and the livelihoods of fishermen throughout the region. Onshore, mining for bauxite and gold and other minerals in the eastern provinces similarly can threaten ecosystems and damage the nearby communities.

What can be done ?

Monitoring and support from international groups may encourage fiscal accountability of the influx of potential wealth.

What can you do?

Reduce your dependence on fossil fuels by biking, using public transport, and supporting cleaner forms of energy. Make a transportation diary, and document all the ways you use vehicles in an average month. Can you improve one carbon-dioxide-emitting event each week? Help reduce dependence on fossil fuels, get healthier through increased pedal-pushing, and support cleaner public transport!